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After the initial market rules were approved by the EMA, the EMC took over their The MAS also adopted a new supervisory framework based, inter alia,

WT/TPR/S/130 Trade Policy Review

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IV. TRADE POLICIES BY SECTOR

    (1) INTRODUCTION

    1. Singapore‚Äôs major economic activities are manufacturing and services (26.3% and 63%,

    respectively, of GDP). Electronics and chemicals form the main manufacturing activities with

    electronics accounting for a major share of total merchandise exports. Competition from low-cost

    producers in the region together with Singapore's rising labour costs and an apparent lack of

    improvement in total factor productivity, have resulted in a gradual shift away from labour-intensive

    to high-value-added capital-intensive activities. Industries such as electronics have had to restructure,

    with production and employment moving out of consumer electronics into semiconductors. The

    Government wishes to sustain manufacturing in Singapore at 20% or more of GDP, and is attempting

    to direct manufacturing into high-value-added activities, primarily through the creation of supporting

    infrastructure and incentives; the sectoral "clusters" currently targeted are: electronics, chemicals,

    biomedical sciences, and engineering (including transport engineering). Recent reforms in the

    economy have also looked at ways to reduce input costs, including through increased flexibility in the

    labour market, wage freezes, and appropriate pricing of land and electricity.

    2. It is also acknowledged that in order for Singapore to compete, it must continue to liberalize, particularly in the relatively more closed utilities and services sectors. In the electricity sector,

    reforms have been implemented gradually. The main reforms include the separation of ownership of

    generation and transmission and liberalization of the retail market; a new regulator for the sector;

    and opening of the retail market to competition through the new electricity market. A number of

    services (including electricity, gas, telecommunications, air services, port services), nevertheless,

    continue to be dominated by companies owned by the Government's holding company. Similar

    deregulation is planned for gas; the supply of water, however, is still subject to a monopoly and

    prices are set by the Government at levels considered to be affordable.

    3. Several services sectors have also been liberalized although government linked companies continue to pervade the sector. In banking, the Government decided in 1999 that it would open up the

    relatively closed domestic retail banking sector to competition and removed foreign investment

    restrictions; steps have also been taken to strengthen the supervisory and corporate governance

    frameworks. In insurance, limits to entry by insurance companies and a foreign equity restriction of

    49% were removed. More widespread reforms have been carried out in telecommunications, with full

    competition permitted as of 2000, two years earlier than originally planned. As a result, there has

    been a substantial decline in telecommunication charges. In transport services, the Government has

    put in place several long- and short-term incentives to encourage growth in the sector and to assist its

    recovery from the SARS crisis in the region. Another key sector affected badly by recent

    international developments is tourism; the Singapore Tourism Board has responded by offering tax

    refunds, training, and other assistance for operators affected by the crisis. Singapore is also trying to

    build up the health services sector, particularly to encourage its use by international patients; the

    number of foreign medical schools that are recognized by the Singapore Medical Council has

    increased, although the registration of foreign-trained medical staff remains tightly regulated. Legal

    services remain relatively closed to non-Singaporeans practising Singapore law, although some

    reform has taken place recently; Singapore did not make any commitments under the GATS in this

    area.

    (2) AGRICULTURE

    4. Agriculture (including fishing and quarrying) contributed some 0.1% to Singapore's GDP in 2003. Around 2,400 people are employed in agriculture. Production, which takes place mainly in

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Singapore's six agrotechnology parks, consists largely of vegetables and fruit and eggs and livestock

    for local consumption and ornamental plants for export. Singapore imports over 90% of its food

    needs and its exports consist mainly of orchids and plants and ornamental fish.

    5. The main change in terms of policy infrastructure since 2000 was the establishment of the Agri-Food Veterinary Authority, a statutory board, which replaced the Primary Production

    Department (PPD) in the Ministry of National Development. The AVA is responsible for managing

    all of Singapore's agricultural land. Land for agricultural purposes is principally managed in the form

    of agrotechnology parks; plots of land in the parks are leased to farmers and companies for periods of

    20 years through an open tender. The AVA provides basic infrastructural facilities, such as water,

    roads, and electricity, as well as technical assistance to farmers in an effort to raise productivity. With

    pressure on agricultural land, Singapore emphasizes the use of new technologies, such as

    biotechnology, to improve productivity. The AVA and the Economic Development Board (EDB) are

    currently promoting an agri-biotechnology "cluster" in the agri-bio park. Land in lots of one hectare

    will be leased for 30-year periods for agri-biotechnology activities.

    6. There have been no significant changes to agricultural trade policy. With the exception of six tariff lines relating to alcohol products, agricultural imports do not face tariffs. Rice remains subject

    to non-automatic import and export licensing for food security reasons (Chapter III(2)(v)). The Thai

    exporter's price is used as the basis for comparison for the price of stockpile grades. According to the

    authorities, the administration of the stockpile scheme does not necessarily translate into higher prices

    for consumers as there is intense competition among local importers. The saturated market conditions

    in Singapore do not allow importers to pass on additional costs to consumers without affecting their

    market share. They state that in early 2003, for example, some importers actually suffered losses

    through aggressive promotion. All imports of agricultural products, meat and fish must comply with

    strict sanitary and health requirements. In some cases, imports of these products are permitted only

    from establishments accredited by the AVA in selected countries. Import licences must be obtained

    from the AVA prior to import (Chapter III(2)(vii)). With the exception of rice and rubber, which are

    subject to non-automatic export licensing, Singapore does not restrict exports of agricultural products,

    except where international agreements and conventions are involved.

    7. There have been no changes to policy regarding fishing. Fishing in Singapore's coastal waters

    is regulated through annual licences issued by the AVA. For offshore fishing, 112 fishermen are

    licensed to operate 23 fishing boats; for inshore waters, 58 fishermen are licensed to operate 46 boats;

    and for operators of coastal fish farms, 177 fish farmers are licensed to operate 69 boats.

    (3) MANUFACTURING

    (i) Overview

    8. Manufacturing in Singapore accounted for 26.3% of GDP in 2003, compared with around 23% of GDP in 1999 (Table I.2). The main sectors, in terms of contribution to value added, are

    electronic products and components, although their share of manufacturing declined from 40.7% in

    1998 to 33.5% in 2002 (Chart IV.1). An industry that has been growing in importance is chemicals

    and chemical products (from 12.4% to 21.6% during this period); and transport equipment is also

    important. Exports continue to be led by machinery and transport equipment (75% of manufactured

    exports) of which electronic valves, office and data machines and telecommunications equipment 1(including electronic products) is the largest group (some 58.9% of total exports of manufactures).

    Singapore's manufacturing imports also consist mainly of machinery and transport equipment (72.4%

     1 Data provided by the authorities.

    WT/TPR/S/130 Trade Policy Review Page 70

     of imports of manufactures) with electronic valves, office and data machines and telecommunications 2equipment accounting for 46.9% of imports of manufactures).

    Chart IV.1

    Value added in manufacturing, 1999 and 2002

    Per cent

    19992002

    Electronic products & Electronic products & componentsMedical, precision & optical componentsMedical, precision & optical 40.7instruments, watches 3.533.5instruments, watches 4.0Transport equipmentTransport equipment7.48.9Electricalmachinery 2.0Other 5.7Other 4.4ElectricalMachinery & Food, beverages & Food, beverages & machinery 2.6equipment 7.4tobacco 3.4tobacco 2.8Printing & reproduction of Machinery & equip.Fabricated Printing & reprod. of recorded media 4.56.6metal productsrecorded media 3.5 5.3Fabricated metal Refined petroleum Rubber & Refined petroleumproductsproducts Rubber & plastic products Chemicals &Chemicals & 6.43.8plastic products4.0 products thereof products thereof products2.721.612.43.1